Chinese Industry Needs to Close Technology Gap, Officials Say

“We have learned a lot from joint ventures, but China must be able to develop its own core technologies,” Guo Konghui, a Jilin University professor, says as Changchun hosts its auto show and VTI technology conference here.

CHANGCHUN, China – Sister city to both Flint, MI, and Windsor, ON, Canada, Changchun is home to nearly 8 million people and prides itself on being China’s motor city.

That claim dates to 1958, when First Automobile Works rolled out the first domestically produced passenger car, the Hong Qi (Red Flag) that was based on the Audi brand through a technical agreement, in a vehicle assembly plant that took five years to build.

Today, FAW Group remains one of China’s top auto makers in what remains the fastest-growing vehicle market on the planet.

This week, Changchun is hosting two events that cement the region’s commitment to the auto industry: the ninth Changchun International Automobile Expo and the Advanced Vehicle Technologies and Integration conference, which is being positioned as China’s version of Detroit’s SAE International World Congress.

The auto show here opened to the public Sunday in sweltering morning heat, and the nine exhibit halls were quickly jammed with an emerging middle class eager to buy cars, SUVs, cross/utility vehicles and minivans.

Shoppers sat behind the wheel, fiddled with switchgear, climbed into the backseat, checked the trunk, mobbed mini-skirted models for photos and haggled with product specialists hoping to move the metal.

Also attending the first day of the show was a contingent of university professors and auto executives from around the world slated to speak at the VTI conference, which runs through Thursday.

Among the attendees is Nico Vandaele, professor-operations management at Katholieke Universiteit in Leuven, Belgium. He has been to China four times in the past five years, and is astounded by the construction and modernization – as well as the heavy traffic.

“There’s a lot more cars now,” Vandaele says of this visit relative to five years ago. “I think there are a lot more Chinese who want to buy a car compared to those who already have a car. I think that gap is closing.”

Economic growth in China is slowing slightly, but Vandaele didn’t see evidence of that in the throngs of people crowding the auto show. “There were lots of people, and I was not aware there are so many cars that are designed specifically for China, with specific shapes and features we don’t usually have in Europe.”

After spending the morning at the auto show, the VTI contingent boarded a bus headed back to downtown Changchun and quickly found itself in Sunday afternoon gridlock amid a steady chorus of honking horns. It took more than an hour to drive a reasonably short distance.

“This situation is not sustainable,” Sun Zongxuan, a professor from the University of Minnesota, said later in the day of the traffic jam. “There must be a solution, and technology has to be a part of it.”

Automotive technology is the focus of the VTI conference, which kicked off Sunday afternoon. Jilin University, located here, is helping host the gathering, along with SAE China and FAW Group.

Jilin University’s College of Automotive Engineering, founded in the 1950s, is one of China’s largest schools dedicated to the industry. Some 17,000 students have graduated from the program and work in the auto industry, including more than 700 in Detroit.

The VTI has been held in previous years as a smaller forum, and about 500 people attended last year. But 2012 represents the first time the event is international in scope, with speakers recruited globally to discuss technical challenges facing the industry, particularly in China.

Keynote speeches will center on driver assistance, electric vehicles, autonomous vehicles, regulatory compliance and powertrain controls. And as with Detroit’s SAE World Congress, the VTI will incorporate panel sessions and the presentation of 120 technical papers.

Speaking at the VTI press conference, Guo Konghui, a Jilin University professor, admits Chinese auto makers are behind the mature markets in terms of technology development. Chinese cultivation of technologies that will make future vehicles safer, more fuel-efficient and easier to manufacture must be a priority, he says.

Chinese auto makers and suppliers have benefited greatly from joint ventures with foreign companies, Guo says. “But we shouldn’t just rely on joint ventures with foreign companies, and I think we should try to gradually build on our own capabilities. We have learned a lot from joint ventures, but China must be able to develop its own core technologies.”

He says the modern Chinese auto industry is like a child of eight or 10 years old who should not need a parent’s help to walk.

But Sun, a University of Minnesota professor who worked for General Motors for seven years and has been in the U.S. 16 years, says foreign companies should not perceive Guo’s comments as a threat to exclude them once the Chinese industry catches up to the established automotive markets.

“I think his point was focused on the fact that the Chinese auto makers did not successfully leverage joint ventures to develop their own technologies,” Sun says. “To rely on the JV is not going to create technology for the automotive OEMs.”

He says Chinese auto makers can claim to have closed the technology gap with the global industry once the U.S. and Europe begin demanding Chinese vehicles based on feature content, style or value. “If you can compete with the more mature markets, it says a lot about your technology.”

As he walked the auto show, Sun says he was surprised to see so many affordable, well-equipped cars priced at about RMB32,000 ($5,000). “Now you have so many choices in the Chinese market. It will be very competitive. I think the market, itself, is quite amazing.”

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